September 30, 2008 / 6:42 AM / 11 years ago

Irish government guarantees all bank deposits

DUBLIN (Reuters) - Ireland’s government said on Tuesday it would guarantee all bank deposits for two years to maintain financial stability amid international market turmoil which has hit Irish bank shares particularly hard.

The scheme, which starts immediately and expires in September 2010, also guarantees covered bonds, senior debt and dated subordinated debt.

It applies to Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society, the government said.

“The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers’ interest can be protected,” it said in a statement.

On Sept 20., a week after U.S. investment bank Lehman Brothers filed for bankruptcy protection, the Irish government had raised the state guarantee limit on deposits to 100,000 euros (79,755 pounds) from 20,000 euros previously.

Ireland, hit by the double whammy of the global credit crisis and a domestic property downturn, became the first euro zone economy to slide into recession this year.

Some Irish banking stocks lost almost half of their value on Monday alone, with European shares widely expected to fall further on Tuesday after U.S. lawmakers rejected a $700 billion emergency rescue plan.

Reporting by Andras Gergely; Editing by Quentin Bryar

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